UPDATE 3-Cumberland Pharma closes first day down 1 pct

* Shares open flat, close down 1 percent on first day

* Second IPO in 2009 to fall on first day (Updates with closing stock price)

By Phil Wahba

NEW YORK, Aug 11 (Reuters) - Cumberland Pharmaceuticals Inc (CPIX.O) finished its first day of trading on Tuesday slightly down, becoming only the second U.S. initial public offering this year to slip in its debut.

The stock began trading at $17, the level at which it priced on Monday evening, and jumped as high as $17.75 before dropping 1 percent to close at $16.83 on Nasdaq.

In June, Nashville-based Cumberland received FDA approval for its Caldolor pain and fever treatment. It also markets and sells Acetadote, an injection that treats poisoning from acetaminophen, the active ingredient in many pain relievers, and Kristalose, a laxative.

The performance of Cumberland's stock puts it in line with those of rival companies, one analyst said, pointing to drug developer Cadence Pharmaceuticals Inc (CADX.O) whose painkiller Acetavance is comparable to Caldolor and is under review by U.S. Food and Drug Administration.

"The original price did not offer upside relative to its peers," said Eric Gunja, a research analyst with Connecticut-based Renaissance Capital, using a ratio comparing company value to sales projections. Cumberland had expected its IPO to price between $19 and $21.

But Cumberland shares could yet rise when investors get a better sense of the firm's plans to market Caldolor later this year, Gunja said.

Cumberland's IPO, which broke a nearly two-year drought for IPOs in the pharmaceutical sector, raised $85 million but became only the second IPO this year out of 16 in the United States to price below its estimate range.

CDC Software Corp (CDCS.O), which fell 16.75 percent in its debut last week, and Cumberland are the only IPOs to swoon in n its first day of trading in 2009.

The IPO comes at a time of renewed interest in biotech and pharma stocks. The Nasdaq Biotech Index .NBI is up 27.9 percent since lows hit in March 2009.

Cumberland posted sales of $9.4 million for the quarter ended on March 31, up 13.2 percent from a year earlier, with a profit of $1.2 million.

The IPO's underwriters were led by UBS Investment Bank (UBSN.VX), Jefferies & Co (JEF.N) and Wells Fargo Securities (WFC.N).

(Reporting by Phil Wahba; Editing by Lisa Von Ahn, Richard Chang and Robert MacMillan)